© ra2studio dreamstime.com Analysis | February 11, 2016
Top3 expand total capital expenditure in 2016
The revenue of the global semiconductor foundry industry is projected to grow by just 2.1% year on year for 2016 on account of slowing end market demand and expanding supply, according to the global market research firm TrendForce.
The competition among major semiconductor manufacturers is therefore going to intensify as well. The total capital expenditure (CAPEX) of the three leading manufacturers – Intel, TSMC and Samsung – is estimated to increase by 5.4 percent annually this year. U.S.-based Intel is projected to increase its CAPEX by 30 percent year on year to USD 9.5 billion. The CAPEX of Taiwan’s TSMC will also reach USD 9.5 billion, representing a 17 percent annual increase. South Korea’s Samsung on the other hand is going to scale back its CAPEX by 15 percent to USD 11.5 billion. TrendForce believes the CAPEX undertaken by these major manufacturers during 2016 will be reflected later in their 2017 revenue results. TSMC’s main focuses this year are manufacturing R&D, expanding the market for its InFO technology and setting up its Nanjing fab TrendForce expects TSMC to concentrate on advancing its manufacturing technology as it is the only pure-play foundry among the three dominant manufacturers and does not compete directly with its clients. TSMC will allocate about 70 percent of its 2016 CAPEX on manufacturing-related R&D, with most of this expenditure going towards developing the 10nm process. This shows that TSMC is resolute in being ahead in the race to achieve 10nm manufacturing. Additionally, investments on the integrated fan-out (InFO) wafer-level packaging will account for 10 percent of the foundry’s CAPEX. The InFO technology promises thinner, smaller products with improved heat dissipation and of consistent quality. There are already some clients placing orders specifically for InFO, and the demand for this technology is expected to increase in the near future. TSMC also intends to move closer to the enormous market in China and will be spending a total of USD 3 billion on building a 12-inch wafer fab in Nanjing. The company plans to invest USD 500 million into the project this year, and larger investments will follow over the next two years. The Nanjing fab is scheduled to be in operation in 2018. Samsung will give more weight to its semiconductor businesses this year as the outlook on its smartphone business is uncertain Samsung’s smartphone business during 2015 was impacted by sluggish demand and lack of product differentiation in the market. Consequently, the electronics giant’s smartphone business suffered an annual revenue decline of 2.6 percent and an annual net profit loss of 20.6 percent. The company’s semiconductor business on the other hand posted an impressive 20 percent annual revenue increase for the same year. Memory and large-scale integration (LSI), which made up the two arms of Samsung’s semiconductor business, saw their annual revenues grew by 17 percent and 27.7 percent respectively. TrendForce believes Samsung is going to rapidly branch out to other businesses this year since the outlook on the company’s smartphone business remains negative. In particular, Samsung will redouble its efforts in the foundry service market and develop a more aggressive strategy to get semiconductor orders. Samsung’s 2016 CAPEX is estimated at USD 11.5 billion, out of which USD 3.5 billion will be allocated to the LSI unit. The company maintains the same level of capital investment on its LSI unit as last year. Intel plans to retain its manufacturing leadership and expand its memory business Intel is currently the leader in the 14/16nm manufacturing. However, its dominance in the CPU market since 1995 will be under threat if it is overtaken by TSMC and Samsung in the development of the 10nm technology. The share of R&D in Intel’s 2016 CAPEX has been increased to about USD 8 billion as the U.S. chip maker strive to maintain its edge in the manufacturing technology. Intel has been very active in the data center market as well. Last year, the company introduced 3D-NAND and 3D XPoint technologies that it jointly developed with Micron. Intel also announced that its logic IC fab in Dalian, China, is going to be converted into a NAND Flash plant at a cost of USD 2.5 billion. The chip maker will allocate about USD 1.5 billion of its total CAPEX for this year to build on the progress it has made on the memory front. ----- More information can be found here: Trendforce
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